Last week, I wrote about Citibank’s new BNPL service, also known as the Installment Payment Plan (IPP). This is currently invite-only, but it seems like only a matter of time before it’s rolled out to the public.
While installment payment plans are nothing new, what makes this one interesting is the fact that Citibank cardholders will earn rewards on their installments. In contrast, other banks’ installment payment plans are explicitly excluded from earning miles, points, or cashback.ย
I’ve now received further information on how this works.ย
Maximizing rewards with IPP
While you can use the IPP with any Citibank credit card, you’ll ideally want to use the Citi Rewards to maximize the points you earn.ย
The IPP currently covers a “wide range of merchants in the electronics, beauty, healthcare, education, clothes and apparels categories.” Citibank has not provided a list, but chances are, quite a few of these merchants will be eligible for 10X points with the Citi Rewards Card.ย
Citi has informed me that if the original transaction qualifies for 10X points on the Citi Rewards Card, this applies even if the customer converts the transaction into IPP. Points will be awarded upfront, while the payment is billed across three months.ย
To illustrate, suppose you purchase something that costs S$300 from a 10X eligible merchant, and put it on an IPP.ย
Month | Payment | Citi ThankYou Points |
Time of purchase | – | 3,000 |
End of M1 | S$100 | – |
End of M2 | S$100 | – |
End of M3 | S$100 | – |
Total | S$300 | 3,000 |
You’ll receive 3,000 ThankYou points upfront. That’s equivalent to 1,200 miles, or an earn rate of 4 mpd.ย
While it’s nice to get your points upfront, this arrangement also means you won’t be able to use the IPP to spread out your 10X cap.ย To illustrate, suppose you purchase something that costs S$3,000 from a 10X eligible merchant, and put it on an IPP.ย
Month | Payment | Citi ThankYou Points |
Time of purchase | – | 12,000 |
End of M1 | S$1,000 | – |
End of M2 | S$1,000 | – |
End of M3 | S$1,000 | – |
Total | S$3,000 | 12,000 |
Once again, you’ll receive your ThankYou points upfront, based on a transaction of S$3,000. Since the 10X points are capped at S$1,000 per statement month, the remaining S$2,000 will earn 1X points. Your total haul will be S$1,000 x 10 + S$2,000 x 1= 12,000 points, or 4,800 miles. The effective earn rate here is 1.6 mpd, because the first S$1,000 earns 4 mpd and the next S$2,000 earns 0.4 mpd.ย
Contrast this to paying with a 3rd party BNPL platform, where your payment schedule and points will look like this:
Month | Payment | Citi ThankYou Points |
Time of purchase | – | – |
End of M1 | S$1,000 | 10,000 |
End of M2 | S$1,000 | 10,000 |
End of M3 | S$1,000 | 10,000 |
Total | S$3,000 | 30,000 |
Because of how the BNPL platform charges your card, you’re able to optimize your 10X cap much better.ย
Now- a quick caveat. Based on MCC and online transaction status alone, I see no reason why they shouldn’t earn 4 mpd with the Citi Rewards Card. However, I’ve received a handful of real-world reports that atome and hoolah transactions did not earn 10X, so I’d strongly advise you to test a small amount before making any big ticket purchases.
BNPL Service | MCC* |
5999: Misc. and Specialty Retail | |
5399: Misc. General Merchandise | |
5999: Misc. and Specialty Retail | |
5999: Misc. and Specialty Retail | |
5399: Misc. General Merchandise | |
7399: Business Services Not Elsewhere Classified | |
*MCCs derived from Visa Supplier Locator. They may be different for Mastercard, but it’s unlikely. |
If you’re just solving for cashflow and don’t exceed the 10X cap on your Citi Rewards Card anyway, then you might as well give yourself added peace of mind by using the IPP when offered.ย
Conclusion
While Citibank’s IPP may not have been publicly launched yet, the initial signs look promising. You get all the cashflow benefits of installment payments, plus rewards points. Provided this doesn’t entice you to spend beyond your means, I see nothing wrong with using it if you’re targeted.ย
now, will there be a useful list of which merchants accept BNPL? thanks aaron!
i’ve put together the various merchant lists in this article: https://milelion.com/2021/04/18/whats-the-best-credit-card-for-buy-now-pay-later-bnpl-platforms/
Say I want to pay school fees of 50K. How does this help me? I am looking around for a credit card or facility that can earn me points through paying the fees. Tks Aaron
short answer is that it doesn’t….apart from cashflow. citibank cards dont earn points for school fees, nor does virtually every bank save maybank and AMEX (https://milelion.com/2020/09/27/whats-the-best-credit-card-for-paying-education-expenses-or-tuition-bills/)
Wait – doesnโt the citi payall allow payment to educational institutions and buy miles at 0.8cpm? But if you factor in that one can get free 1.2 mpd with Maybank cards, then the cpm with citi payall would be 1.54cpm instead of 0.8cpm.
I’m talking about free ways of earning miles. You can of course pay with payall Cardup easybill etc if you don’t mind the fee